Extreme Weather Has Texas Contractors Pressing Pause on Projects

It appears everything is bigger in Texas—even its temperature extremes. A recent barrage of winter weather has Texan contractors shutting down their construction sites across the state.

The temporary shutdowns are not only the result of snow and ice accumulation, but the uncharacteristic drop in temperature and loss of power. Many contractors are taking precautions to protect their workers as well, referencing the dangers that come from having their workers travel on the roads.

However, these delays may come with repercussions because many of these projects could experience cost increases, loss in productivity, damage costs and more.

"Contractors really need to read their contracts to determine which contract clauses apply to the many layers of disruption and increased costs that resulted from the weather and related outages," said Jason Walker, shareholder and director of litigation with Andrews Myers in Houston. "Many contracts only provide for time extensions to the construction schedule in the event of a weather-related delay, not compensation for lost time or productivity."

So, although these delays have already made an immediate impact, contractors may see themselves running into legal issues with their properties.

"There are some narrow 'common law' theories that may fill in some of the gaps when the parties' written contract either doesn't speak to a particular situation or delay, or is vague and ambiguous," Walker said.

Although most construction agreements allow for built-in extensions due to the possibility of extreme weather, that doesn't exclude the possibility of damaging ripple effects.

Chris Ring, of NACM's Secured Transaction Services (STS), points to the disruption in the general flow of cash. With many of our members being material suppliers on projects, there's a chance that future issues may arise, Ring said. "Most of our members sell to subcontractors. So, the property owner pays the general contractor; the general contractor pays the subcontractor; and then the subcontractor pays our material supplier members."

This news becomes even more concerning when you consider the exponential rise in steel and lumber costs, which could slow construction jobs even more, according to Construction Dive. With steel and lumber being two primary building materials, contractors may have more than just poor weather conditions to overcome.

Construction Dive reports that over the past year, softwood lumber prices surged 73%, according to the Producer Price Index. For iron and steel scraps, there was a 50.8% upswing during that time, including a 20.6% rise from December to January.

In the Austin American-Statesman, Vaike O'Grady, regional director for Zonda states, "The delays come at a particularly hard time because we are so behind in adding to desperately needed supply.

"Bad weather is always tough on the homebuilding industry," said O'Grady. "In this case, we're dealing with never-before-seen temperatures that will no doubt cause widespread damage. Unfortunately, most job sites will have had to shut down. That means delays in new home starts as well as challenges in homes getting completed for home buyers."

Despite the possibility of potential financial heartache, contracting companies like AECOM and DPR don't plan on opening until it's safe for workers to be on the job site. Both AECOM and DPR have used emergency measures that were set in place and look to protect the wellbeing of their workers.

"Right now, we're trying to stay in touch with our employees and make sure they're safe," said Matt Hoglund, regional manager with DPR Construction, per Construction Dive. "That's what's most important."

-Bryan Mason, editorial associate

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Tuesday, 13 April 2021

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